Stocks jump on Europe bank chief's 'no-limit' bond plan

NEW YORK - U.S. stocks jumped at the open of trading Thursday as investors react positively to the European Central Bank chief's remarks that there will be "no set limit" to a bond-buying program to reduce borrowing costs for heavily indebted eurozone countries.

Within 10 minutes after trading began in the U.S., the Dow Jones industrial average, the Standard & Poor's 500 index and the Nasdaq composite index were up 1% or more.

The ECB chief said the International Monetary Fund will monitor the central bank's unprecedented plan to purchase bonds in an effort to lower interest rates for eurozone nations in financial crisis. One small disappointment: the ECB announced that it is leaving its benchmark interest rate at 0.75%; investors had been hoping for a quarter-point cut.

Stocks are also getting a lift from a government report showing that initial claims for unemployment benefits fell 12,000 to 365,000 for the week ended Sept. 1. And ADP, a paycheck processing firm, on Thursday said that 201,000 private-sector jobs were created in August. Both reports suggest that hiring could improve in recent weeks although neither report consistently mirrors the government's monthly employment report. The August reading is due out Friday.

European stock markets were up sharply on the comments of ECB chief Draghi. Stocks in London were up 0.8%, shares were up more than 1.3% in Germany and stocks in Paris were up 1.3%.

In a long-awaited move by investors around the globe, ECB president Mario Draghi on Thursday announced in a press conference that the central bank will buy short-term sovereign bonds with maturities of three years or less in an effort to push down interest rates, boost economic growth and stabilize financial markets in Europe.

The ECB is calling the program OMT, short for outright monetary transactions. Basically, countries that want ECB assistance would have to apply. However, the ECB says conditions will be attached to the program. Once the ECB starts buying sovereign bonds - with the hope of driving rates lower as well as providing countries with much-needed liquidity - it has the option of terminating the purchases if countries don't comply to conditions set.

Investors have been anxiously awaiting the ECB move as the economic conditions in Europe have been deteriorating amid a deepening recession, sky-high sovereign debt loads and dangerously high interest rates in countries such as Spain and Italy, which are making it difficult for these countries to pay debts and keep their governments operating.

Flooding markets with liquidity has been a boon to stocks in the U.S. since the financial crisis. The Federal Reserve's bond-buying programs, dubbed quantitative easing, of which there were two, and Operation Twist, have been a key driver of the more than 100% gain for stocks since the March 2009 stock market low.